GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
PAYMENTSSIGNAL

The interactive academy for the standards, messages, and rails that move money.

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SEPA DIRECT DEBIT

Taking it back: an 8-week no-questions-asked SDD refund

Trigger: Within 8 weeks of the debit date, Riya asks Bank Alfa to refund a Core direct debit — no reason required.

Contributor Shubham Mathure

What operations sees first: Operations sees a refund claim on a collection that already settled and posted; the biller was already credited.

WHERE IS THE MONEY?

Returned to Riya's account after the refund settled.

DID SETTLEMENT HAPPEN?

Original collection settled, then reversed by a separately settled refund.

WHO ACTS NEXT?

Riya (debtor) Asha Traders resolves the invoice with Riya directly; beyond 8 weeks a claim is possible only for unauthorised collections, up to 13 months, and is not automatic.

PLAY THE EXCEPTION

Trigger: Within 8 weeks of the debit date, Riya asks Bank Alfa for a refund of the direct debit. For a Core collection this refund is unconditional — no reason is required.

STEP 1 / 11INTERNAL

Asha Traders confirms the mandate

Asha Traders (creditor / biller)

Before pulling any money, the biller checks it holds a valid mandate that Riya signed authorising these collections. The mandate — not the invoice — is what permits the pull; no mandate means no right to debit.

Checks

  • Mandate reference on file
  • Debtor's IBAN matches the mandate
  • Mandate not cancelled or expired

Step 1 of 11: Asha Traders confirms the mandate

  1. 01Processing
    Asha Traders confirms the mandateAsha Traders (creditor / biller)
  2. 02Message
    Asha Traders pre-notifies Riya of the collectionAsha Traders (creditor / biller) → Riya (debtor / customer)
  3. 03Message
    Asha Traders submits the collection to NordbankAsha Traders (creditor / biller) → Nordbank (creditor bank) · pain.008
  4. 04Message
    Nordbank submits the interbank collectionNordbank (creditor bank) → STEP2-T (CSM) · pacs.003
  5. 05Clearing obligation
    The CSM calculates obligationsSTEP2-T (CSM)
  6. 06Settlement
    Positions settle in central bank moneyBank Alfa (debtor bank) → Nordbank (creditor bank)
  7. 07Posting
    Bank Alfa debits RiyaBank Alfa (debtor bank)
  8. 08 · EXCEPTION PATHMessage
    Riya claims a refundRiya (debtor / customer) → Bank Alfa (debtor bank)
  9. 09 · EXCEPTION PATHMessage
    Bank Alfa sends the refund backBank Alfa (debtor bank) → STEP2-T (CSM) · pacs.004
  10. 10 · EXCEPTION PATHSettlement
    The refund settles backNordbank (creditor bank) → Bank Alfa (debtor bank)
  11. 11 · EXCEPTION PATHPosting
    Bank Alfa re-credits RiyaBank Alfa (debtor bank)
  12. OUTCOME
    Funds
    Returned to Riya's account after the refund settled.
    Settlement
    Original collection settled, then reversed by a separately settled refund.
    Who acts next
    Riya (debtor / customer) — Asha Traders resolves the disputed invoice with Riya directly; beyond 8 weeks a claim is possible only for unauthorised collections, up to 13 months, and is not automatic.
Full step-by-step text (works without JavaScript)
  1. 01Processing
    Asha Traders confirms the mandateAsha Traders (creditor / biller)

    Before pulling any money, the biller checks it holds a valid mandate that Riya signed authorising these collections. The mandate — not the invoice — is what permits the pull; no mandate means no right to debit.

  2. 02Message
    Asha Traders pre-notifies Riya of the collectionAsha Traders (creditor / biller) → Riya (debtor / customer)

    The creditor tells the debtor the amount and the due date in advance, so Riya can expect the debit and keep the account funded. This is a courtesy notice ahead of the pull, not the money movement itself.

  3. 03Message
    Asha Traders submits the collection to NordbankAsha Traders (creditor / biller) → Nordbank (creditor bank) · pain.008

    Here is the mirror image of a credit transfer: the instruction starts at the payee. Asha Traders sends a pain.008 collection request to its own bank, Nordbank, to go and pull the funds from Riya's account.

  4. 04Message
    Nordbank submits the interbank collectionNordbank (creditor bank) → STEP2-T (CSM) · pacs.003

    Nordbank converts the customer collection into an interbank pacs.003 and submits it to the clearing and settlement mechanism, which will route it toward the debtor's bank to be collected on the due date.

  5. 05Clearing obligation
    The CSM calculates obligationsSTEP2-T (CSM)

    On the due date the CSM validates the collection and includes it in a clearing cycle, calculating who owes whom. In a pull this obligation runs from the debtor's bank to the creditor's bank — the reverse of a credit transfer.

    Clearing produces obligations only. Nordbank does not have Asha Traders' money yet — that waits for settlement.

  6. 06Settlement
    Positions settle in central bank moneyBank Alfa (debtor bank) → Nordbank (creditor bank)

    The calculated positions settle across the banks' accounts at the central bank. Money moves from Bank Alfa (debtor side) to Nordbank (creditor side) — funds flowing debtor to creditor even though the instruction came from the creditor.

    • DR Bank Alfa settlement account — EUR 480.00
    • CR Nordbank settlement account — EUR 480.00
  7. 07Posting
    Bank Alfa debits RiyaBank Alfa (debtor bank)

    Bank Alfa books the debit against Riya's account for the collected amount. This is the customer-facing side of the pull: money leaves the debtor's account because the mandate authorised it.

    • DR Riya's current account at Bank Alfa — EUR 480.00
  8. 08 · EXCEPTION PATHMessage
    Riya claims a refundRiya (debtor / customer) → Bank Alfa (debtor bank)

    Under the SEPA Core rules a debtor may reclaim any collected direct debit within eight weeks of the debit date with no justification at all. Riya lodges the claim with Bank Alfa and does not have to explain why.

  9. 09 · EXCEPTION PATHMessage
    Bank Alfa sends the refund backBank Alfa (debtor bank) → STEP2-T (CSM) · pacs.004

    Bank Alfa raises a pacs.004 return-of-funds referencing the original collection, so the refunded amount can travel back through the CSM toward Nordbank and the biller.

  10. 10 · EXCEPTION PATHSettlement
    The refund settles backNordbank (creditor bank) → Bank Alfa (debtor bank)

    The refund is itself cleared and settled — money moves from Nordbank back to Bank Alfa in central bank money, reversing the original pull direction.

    • DR Nordbank settlement account — EUR 480.00
    • CR Bank Alfa settlement account — EUR 480.00
  11. 11 · EXCEPTION PATHPosting
    Bank Alfa re-credits RiyaBank Alfa (debtor bank)

    Riya gets the full amount back. The eight-week refund is a right, not a favour — the biller must later chase Riya directly if it still believes the invoice is owed.

    • CR Riya's current account at Bank Alfa — EUR 480.00
  12. OUTCOME
    Funds
    Returned to Riya's account after the refund settled.
    Settlement
    Original collection settled, then reversed by a separately settled refund.
    Who acts next
    Riya (debtor / customer) — Asha Traders resolves the disputed invoice with Riya directly; beyond 8 weeks a claim is possible only for unauthorised collections, up to 13 months, and is not automatic.

THE TIMELINE

  1. 01Riya (debtor)
    Asks Bank Alfa for a refund of the EUR 480.00 collection, within 8 weeks of the debit date, giving no reason.
  2. 02Bank Alfa (debtor bank)
    Raises a return-of-funds referencing the original collection and sends it back through the CSM.pacs.004
  3. 03Nordbank / Bank Alfa
    The refund clears and settles back in central bank money — money moves from the creditor side to the debtor side.
  4. 04Bank Alfa
    Re-credits Riya in full; Asha Traders must chase the disputed invoice directly if it still believes it is owed.

Resolution: The Core scheme gives the debtor an unconditional refund for eight weeks after the debit date. The money returns as a separately settled movement; the commercial dispute, if any, is then between biller and customer.

MESSAGES INVOLVED

LEARN THE CONCEPTS

Sources for this scenario2
  1. Scheme-specific rule2025 v1.1 (EPC016-06)

    2025 SEPA Direct Debit Core rulebook version 1.1 (EPC016-06) ↗ — European Payments Council · refund provisions

    Rules of the SEPA Direct Debit Core scheme: mandates, collection lifecycle, timelines, R-transactions, and refund rights. · Effective 2025-10-05 · Checked 2026-07-13

  2. Simplified educational illustration

    Payments Signal editorial teaching models — Payments Signal

    This site's own simplified teaching models. · Checked 2026-07-12

    What this simplifies: Single-CSM/single-cycle model; institution-specific handling and exact scheme timings vary.

    Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.